A plug-in hybrid vehicle includes a transmission, an internal combustion engine, an electric motor-generator, and a rechargeable energy storage device such as a battery. Accordingly, the vehicle can be propelled by the internal combustion engine, the electric motor, or both. Sometimes, the vehicle may be solely driven by the electric motor powered by a rechargeable battery. Sometimes, the vehicle may provide an option to the user to manually select a drive mode known as mountain mode, when the vehicle user anticipates driving in mountainous regions where the vehicle is expected to climb steep uphill grades or drive in very hilly terrain. In mountain mode, the vehicle is commanded to charge the battery to a predetermined state of charge (SOC), which may be referred to as the mountain mode SOC, and to maintain a reserve electrical charge of the battery at the mountain mode SOC to provide a minimum level of grade climbing performance. The predetermined value for the mountain mode SOC is independent of, e.g., not variable with, the actual use conditions of the vehicle, such that the mountain mode SOC may be in excess of the actual road load energy required by the vehicle to complete the trip. While driving in mountain mode and due to the charging requirements of mountain mode, the vehicle may have less responsive acceleration. If mountain mode is not selected by the vehicle user while driving in mountainous regions, propulsion power may be reduced and the vehicle performance limited, which may result in increased fuel consumption.